Consumer Champion with Sinead Ryan - MOST of us only pay attention to global energy news in passing. But the collapse in world oil prices is having real and sustainable benefits for consumers in Ireland.
We import all our oil, and most of our other energy needs, so changes elsewhere affect us a lot.
This week I’ve had a look at why, what we can expect on our bills and what’s likely to happen in the future.
Between 2012-2014 a barrel of crude oil (which is how it is measured, in US dollars) costed around $110. At the moment it’s just $28. That’s a massive shift down and the collapse has meant contingent prices everywhere dropping.
Good news for families, but bad for the economy. Why?
Well, countries such as Russia and Venezuela depend massively on oil exports. Spiralling inflation and poor economic management has resulted in low prices.
But Saudi Arabia, the world’s biggest producer, which needs oil priced at around $100 a barrel to be sustainable, is choosing to tough it out rather than cutting its own production to increase prices.
It can well afford to sit and wait (it has $700bn in cash reserves); it believes wiping out its competitors is preferable to making money at the moment.
So, these seemingly “far away" issues are our gain in three areas, but are we really feeling it as we should?
No doubt pump prices have come down. Petrol is around 126.5c per litre in Dublin, down from over 140c a year ago.
However, given that taxes make up 90c of every litre, motorists aren’t seeing the drop they should.
The actual price of a litre of petrol is just36.6e, according to AA Ireland, with taxes making up the remainder, which are fixed, rather than a percentage.
Prices differ by up to €5 per fill however, so check out apps like Pumps.ie andWhatgas.com to see a Dublin map of petrol stations.
Here is the biggest drop. Anyone re-filling their oil tank since last year will find 1,000 litres of Gas Oil costing around €527, and Kerosene €445, a massive drop from over €800 last year. Buy now, and fill up as it may not last. Try cheapoil.ie for a comparison of suppliers.
Gas and electricity prices at home are the slowest to catch up. While suppliers claim that they buy their gas in advance by up to a year, taking time to filter down to consumers, I’m not convinced that they couldn’t do more.
Discounts across the board average around 2.5pc at the moment, but given wholesale gas is down 26pc in a year, they are clearly continuing to profit.
The best discounts are reserved for new customers (switchers). Just 15pc of households switch their electricity or gas supplier each year, meaning that the other 85pc are profit machines for the companies.
So, we need to do more ourselves to bag a bargain. But even comparing one against the other is challenging. For instance, do you know what a kilowatt is?
It’s the standard unit of measurement for electricity and is the equivalent of using a 1,000 watt electric heater or 10 100-watt light bulbs for one hour.
Most hairdryers are 2,000 watt, so an hour’s worth of drying is 2 units, or around 40c.
Thinking about it like that makes you use it more efficiently. An LED lightbulb is 15 times more efficient than a regular one.
All this helps far more to get your energy costs down than hoping suppliers will drop their prices, says Simon Moynihan of Bonkers.ie, a comparison site accredited by the Commission for Energy Regulation (CER).
But there are deals, and switching makes a difference, especially if you do it every year, sign up to a 12-month contract on direct debit payments.
Until then, suppliers remain complacent because they know most customers couldn’t be bothered.